Working Paper: NBER ID: w29477
Authors: Christopher T. Stanton; Catherine Thomas
Abstract: This paper estimates the magnitude and distribution of surplus from the knowledge worker gig economy using data from an online labor market. Labor demand elasticities determine workers’ wages, and buyers’ past market experience shapes both their job posting frequency and hiring rates. We find that workers on the supply side capture around 40% of the surplus from filled jobs. Under counterfactual policies that resemble traditional employment regulation, buyers post fewer online jobs and fill posted jobs less often, reducing expected surplus for all market participants. We find negligible substitution on the demand side between online and offline jobs by assessing how changes in local offline minimum wages affect online hiring. The results suggest that neither online or offline knowledge workers will benefit from applying traditional employment regulation to the online gig economy.
Keywords: Online gig economy; Surplus distribution; Labor market regulation; Knowledge workers
JEL Codes: F66; J23; J8; L24; L51; M5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Changes in local offline minimum wages (J38) | Online hiring (J23) |
| Hiring tax (H29) | Hiring rates (J63) |
| Hiring tax (H29) | Static buyer surplus (D41) |
| Hiring tax (H29) | Provider surplus (D46) |
| Wage floor of $7.00 per hour (J38) | Hiring frequency (J63) |
| Wage floor of $7.00 per hour (J38) | Overall surplus (H62) |
| Counterfactual policies resembling traditional regulations (L51) | Job postings (M51) |
| Counterfactual policies resembling traditional regulations (L51) | Expected surplus for all market participants (G19) |
| Workers (J89) | Surplus from filled jobs in the online gig economy (D26) |
| Labor demand elasticities (J23) | Workers' wages (J31) |
| Buyers' past market experience (G41) | Labor demand elasticities (J23) |